A moratorium has been issued in response to reports that the practice can result in large and unexpected medical bills for some senior citizens.
In what could be yet another blow to health plans struggling to remain viable under Obamacare, the Centers for Medicare & Medicaid Services has stopped accepting proposals from health insurance companies that enroll customers in Medicare Advantage plans without their consent.
The announcement came in a memo from Michael Crochunis, acting director of the CMS Medicare Enrollment and Appeals Group, who noted that the moratorium was in response to recent inquiries about the automatic conversion, also known as "seamless enrollment" or "seamless conversion."
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Crochunis was most likely referring to criticism spawned by recent news coverage such as a July Kaiser Health News story that details how senior citizens are shocked to find themselves enrolled in a private Medicare Advantage plan even though they had enrolled in Medicare.
In many cases, customers don't find out they have been transitioned to a private plan until they receive medical bills for treatment outside the plan's network.
Health plans must get CMS permission to engage in seamless enrollment, but CMS has been routinely allowing health plans to enroll members of marketplace or other commercial plans into Medicare Advantage once the insured become eligible for Medicare. CMS has even reminded insurers about the opportunity.
Moving customers to Medicare Advantage plans can result in more revenue for payers, but consumer and watchdog groups have criticized seamless conversion as a sneaky move that robs seniors of the ability to choose their own health coverage.
"It flew under the radar for quite a long time, and it's just beginning to gain more attention," Gretchen Jacobson, associate director of the program on Medicare Policy at the Kaiser Family Foundation told Money.
CMS requires that beneficiaries be notified in writing at least 60 days before the conversion, and the health plan must provide information on how to opt out of the conversion. But opting out requires affirmative action; doing nothing results in conversion to Medicare Advantage.
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Twenty-nine Medicare Advantage companies have been granted permission from CMS to move beneficiaries into their Medicare Advantage products, and half of them got the go-ahead this year. These include big players such as Aetna, UnitedHealth Group, and Blue Cross Blue Shield.
CMS previously did not disclose which companies used seamless conversion, but in conjunction with the moratorium, CMS published data on how seamless conversion has been used to date.
"CMS is temporarily suspending its acceptance of any new seamless enrollment proposals. Further, for MA organizations currently approved to offer seamless conversion enrollments, CMS will soon issue a memorandum clarifying current policy and requirements," The memo from Crochunis stated.
CMS released a statement saying it continues to look for ways to improve the seamless enrollment process.
It seeks to ensure that automatic enrollment into the Medicare Advantage plan is in line with the beneficiary's wishes and is not the result of "a lack of understanding on the part of the beneficiary of the need to deliberately decline the Medicare Advantage enrollment if it is not desired."
Gregory A. Freeman is a contributing writer for HealthLeaders.